If latency is the question, is co-location the answer? Possibly, yes, but the equation is not quite that simple. Proximity hosting at a data centre delivers a near-optimum solution, especially if the data centre also plays host to one or more trading-venue matching engines and access points. Proximity hosting is also a growth industry, with the trading 'map' being redrawn as more and more square-footage of floor space opens up in key locations. You can effectively outsource many of your connectivity issues to a data centre.
And yet that's not quite the whole story. Proximity hosting levels the playing field at near-zero latency, but in doing so, it brings to prominence another issue: capacity. It may be crucial to stay ahead at peak times, but what do you do with all that capacity when nothing much is happening? Flexibility is key, and cloud computing offers a flexible solution. Now, the only question is: what about volatility? We're not talking about "capacity delivery latency" here, are we?